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Monday, August 20, 2023

Regeneration areas out perform all other UK property investments

Investors 'miss a trick' as trend shows regeneration areas out perform all other UK property investments

Institutional investors may be missing out on higher returns by ignoring the potential for investment in regeneration areas because of poor historical performance, according to new research from IPD.

Commissioned by national regeneration agency, English Partnerships, the IPD Regeneration Index 2007 examines 21 regeneration areas across England. Overall investment in these areas gave higher returns than investment in all other UK Property areas over the past five years, growing at a rate of 16.7% year on year, versus 15.1%.

The trend is replicated across retail, commercial and residential properties and confirms that investment in regeneration areas should no longer be considered a niche market.

English Partnerships Head of Policy and Economics, Steve Carr, said: "These figures confirm unequivocally what we have suspected for a long time - that investors are missing a trick in avoiding regeneration areas because of poor historical performance. And ironically, it is precisely this relatively lower past performance which makes regeneration areas so ripe to deliver great returns in future.

Rebecca Graham, IPD Research Analyst, said "Over the long term, returns were stronger in regeneration areas than the rest of the UK. In the office sector the results tell us that it is possible to achieve higher returns for less risk. Property in regeneration areas should not be disregarded because of its location. The opportunities are there and properties in regeneration areas should be considered for portfolio investments".

This is the fifth year that the IPD Regeneration Index - created by English Partnerships, IPD, Morley Fund Management and Savills - has been published, allowing analysts to study a five year trend for the first time.